For five years, neighbours could ignore the fact that an unassuming red brick house in Old Toronto was harbouring a sex club. But Ontario’s smoking laws changed this year, and Oasis Aqualounge’s customers can no longer indulge in post-coital cigarettes on the club’s private pool deck. They have to leave the building to light up, and neighbours have complained about seeing too many alfresco birthday suits.

Ten years ago, the Supreme Court of Canada legalized sex clubs, but money can’t be exchanged and the venues can’t be open to the public. So when you walk into Oasis, you first have to sign a waiver, to ensure “people understand they will see naked people, they will see people having sex, and if they’re uncomfortable with that, they shouldn’t come in…” says Richard, Oasis’s majority owner (who asked for his surname to be withheld). “From a legal standpoint, the important thing is they know they’re coming into a sex club.”

After returning inside from lighting up, Oasis customers can dance on the ground floor where pornography plays on the wall-mounted TV. They can head upstairs to play in a public dungeon, watch others through well-positioned windows or get busy themselves in a private locked room. And they’re allowed to have sex anywhere in the club except for the hot tub.

Go to your average pickup bar or nightclub, you don’t know if you might be going home with Mr. or Ms. Rapist. Since people visit sex clubs for, well, sex, the clubs are less likely to be full of belligerent Bay Street bros pounding back Jagerbombs who won’t take no for an answer. Aurora Benzion, co-owner of the Toronto sex club Wicked, hasn’t seen any cases of date rape at her club, and at both businesses, staff members are ready to intervene if there’s ever a consent issue.

“Some businesses push limits because they need to be viable,” says Richard. “We’re pushing the limits by allowing sex. So pretty much everything else is by the book. It’s a lot less risky an environment than people would think.”

On the insurance side, “people come for sex, so men don’t drink as much as they might at a bar,” he says. “They’re not here to drink. It’s not going to help them.” That means fewer liquor liability claims than at a nightclub.

Sex club clients are often more mature than the students and twenty-somethings who frequent nightclubs, and they go out for different reasons, says Paul Clarke, national underwriting manager at Burns & Wilcox Canada, who has insured clubs for 25 years.

“We would put clauses in there [saying] we’re not responsible for any transmissions of diseases or anything like that,” says Clarke. Specialized equipment like stripper poles and sex swings can also be insured—you have to consider potential liability claims as well as the equipment itself. Clarke says it wouldn’t be too different from covering a club with a mechanical bull.

Then there are the nightclubs, where the younger crowd can’t afford to get blotto on $15 cocktails, so there’s a lot of pre-drinking going on. A security team that screens patrons at the door is key because “as soon as you let them into your establishment, they become your problem,” says Zena Nucifora, a senior underwriter at the South Western Group, who has been insuring clubs and adult entertainment venues since 1996. But bouncers need their own insurance. If a security staff member starts throwing punches, the club may not avoid a lawsuit, but they can at least share the legal costs and potential payout with the security company’s insurer.

Clubs can also share liability among themselves, especially if a patron is injured during a pub crawl. “Each of those bars that person visited can be brought in on the one claim” says Nucifora, because of joint and several liability. The first club visited will pay the least “because you walked in there, you haven’t had anything to drink. I gave you two drinks. I didn’t lead to the motor vehicle accident, which is the end result. I sort of contributed, maybe by one percent by the giving you the alcohol. But the tenth bar, those people shouldn’t even be allowed in because now you’re impaired and I know you’re impaired.”

After motor vehicle accidents and being assaulted by a bouncer (who is stone-cold sober, protecting the joint), Clarke says the most common nightclub claim is… wait for it… surprise: a slip-and-fall (all that booty-poppin’ fail). Many nightclubs have switched to all-plastic cups in order to minimize accidents.

Nucifora agrees, saying nightclubs must put together protocols for those situations. “So, you’ve got young girls wearing high, very uncomfortable shoes, and they can slip on a wet straw on the floor,” she says. “They can hurt themselves. They take their shoes off halfway through the night, and they’re dancing on the dance floor in their pantyhose or bare feet, and there’s broken glass everywhere.” Bathroom attendants—though growing rare—ensure patrons don’t fall unconscious in the washrooms, and they can help clubs in liability suits.

Strip clubs don’t have to worry quite so much, protected as they are by your standard CGL policies. If a club has strippers on staff (but few do, since a steady supply of fresh faces is good for business), any accidents are covered under workers’ compensation, says Nucifora. But strippers working as independent contractors aren’t covered at all (ba-dum-dum).

If a strip club patron gets grabby or “does something to the point where it becomes criminal,” says Clarke, “they can certainly be charged, but your insurance policy’s not going to respond to criminal acts.” Strip club patrons are less of a risk in terms of liquor liability because, like the ones at sex clubs, they’re not just there to drink. And in the early years of Nucifora’s career, she never had any problems with clients. “…If a husband was at the strip joint, and something happened to him, that was nothing in comparison to what was going to happen to him by his wife when he got home.” These days, however, a strip club might act as the local bar, with couples stopping by together to grab a beer, chat with friends and maybe eye the girls. So insuring the joints are getting riskier—but still less risky than nightclubs.

The Toronto club Muzik has been sued more than a dozen times by club-goers alleging that it lacks proper security. As the Toronto Star reported, one lawsuit is looking for $5 million in damages on behalf of Naveed Shahnawaz’s estate, claiming that in 2013, Muzik gave the 19-year-old and his friends drinks when they already seemed drunk, and that they didn’t do enough to protect them when Shahnawaz tried to break up a fight in a nearby parking lot and was shot dead. His killer was convicted of manslaughter. Muzik denies all allegations.

Whatever protection Muzik should have relied on (and the cases are still before the courts), there are creative options beyond bullnecked beefcakes barring the door. “If you put a very nice, sexy woman at the front door, and she walks up and down the line and chats these guys up, they don’t care if they ever get in,” says Nucifora. She could chat with men waiting in line, distract them from the hour-long wait and subtly check to see if they’re already inebriated. When the men finally enter the club, “they’re calmer. They’re not stressed out thinking, ‘I’ve been waiting here forever to get in.’”

Not all nightclubs are good clients for an insurer to have, and it takes some investigative skills to determine whom to work with. Before she sends out a quote, Nucifora checks reviews of each club to determine what patrons think. “I want to see what it looks like on the outside,” she says, “what they’re saying about the inside, [if it’s] ‘the bouncers are jerks, they pushed me out the door.’” She adds the Alcohol and Gaming Commission’s website “is your best friend,” since it lists all bars, restaurants and clubs that have had liquor infractions or have lost their licenses.

“Nightclubs require true underwriting,” says Clarke. “There is not a manual you can pop the rates out of.”